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Market Pulse: (Big Picture)
14 June 2021 11. 20 time
Strategy: I trade with daily open as the axis in my quest to extract volatility or the lack of it. I try to identify the velocity of momentum rather than target breakouts. It is pure discretionary trading. It is like my brain has been fed/inputted over time with data generated by statistically/probablity analysis studies designed by me.
My Account Balance: USD 373. 8k increases by 21:15 HK time to $376.8k
It is going to be a cocktail of rollover and expiry of the four instruments creating momentum dances this week until Friday. Good opportunity for DAX futures and options trading. This Friday at the same time four assets - stock futures, stock indices futures, stock index option and stock options - will expire and expected to create a lot of volatility and momentum.
US Central Bank is also going to decide on how to tackle inflation. It is again a very significant news event.
My Momentum Ballet Star will be DAX futures supported by DAX options
My Momentum Ballet Star will be DAX futures supported by DAX options
Open Interest means there is a buyer for every call sold or there is a seller if a buyer is available.
A buyer/seller could be hedging a position, or buying/selling as part of a spread strategy, or like me, could be just buying/selling for Speculation
Options sentiment: Bulls betting strong. Not sure if Buyers outnumber sellers. Open Interest gives no indication about buying and selling. In Germany, if market makers have sold those options, they will try to take the market down. If buyers have done these transactions for hedging or as part of spreads, they are not going to go away.
Option speculators, like me, will get out the moment market makers start cleaning up to avoid payouts to the buyers. As a speculator I am prejudiced in assuming most of the selling is done by the market makers and that they will bring down the prices closer to the buyer's strike price or less than that, so that the buyers will lose by time decay or may lose the entire premium paid if the price goes down below the strike price.
The probability of tug-of-war is not ruled out if Short Covering starts.
My trading tactics and risk management
Portfolio based risk Management is the foundation of my trading. Flexibility and capital efficiency are provided by the Exchanges in the form of Eurex Prima (Margin Class) and CME SPAN calculated on a daily basis.
Exchange facilitated margin is a boon for a Sindhi trader like me. All futures, together with future options are clubbed together and unrealised profits and losses of futures and options are offset against each other on a daily basis.
Diversification helps me keep the drawdown down
Diversification helps me maximise the rate of return on capital.
Naked selling of options is rarely done - unless strangles or straddles are involved.
Buying of options or spreads caps the risk.
Hedging requires locking and relocking. But it is worth it and cuts overnight Flash crash risks and gaps.
It is an skill I have acquired by practising for years and investing a lot of time in it.
Monday 21: 19 Now I have to go for a routine walk. So I hedge my positions and go out.
By hedging 10 positions of DAX requiring around $400,000 I have brought down the Maintenance Margin to less than $5,000. Other $25,000 is related to trading of assets other than Dax Futures.
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